State yet to pay millers Sh550 million for maize flour subsidy program

10 of the millers have been auctioned as they cannot afford to pay up their loans, says chair

In Summary

• 48 millers under the Grain Mill Owners Association supplied maize flour under the Government's subsidy programme.

• 22 have either closed shop or have slowed their daily operations due to lack of resources.  

Some of the government branded packets of maize flour. /COURTESY
Some of the government branded packets of maize flour. /COURTESY

Small-scale millers who supplied government's subsidised flour worth Sh550 million in 2022 are yet to be paid.

Grain Mill Owners Association said several millers have shut down due to lack of finances.

Chairman Kennedy Nyaga said some of the millers have had their property auctioned by lenders seeking to recover money owed.

“Of the 48 millers who supplied maize flour under the subsidy programme, 22 have either closed shop or have scaled down their daily operations,” he said. 

Nyaga said 10 millers have had their properties auctioned.

He urged Parliament’s Agriculture and Livestock Development committee to expedite the publication of its report on the subsidy programme once the National Assembly resumes sittings.

“Once the report is out, I am hopeful that we will be considered in the supplementary budget,” Nyaga said.  

A report by the committee released in June 2023 recommended that money owed to the millers be paid by the relevant ministry.

While tabling the report, committee chairperson John Mutunga said the inquiry sought to establish whether the maize flour subsidy programme achieved its objective. It also looked into whether there was value for money.

He said in recent years, Kenya has experienced maize deficits as a result of prolonged droughts.

The country’s maize productivity has also been hampered by high cost of agricultural inputs, decreasing acreage for farming due to population growth and poor agronomic practices.

“To bridge the deficit, the country relies on imports from the East Africa Community and Comesa regions. But this was not the case in 2022 because there was poor production of maize in the region,” the report read.

The maize shortage drove prices up from between Sh3,000 and Sh3,500 per 90kg bag in April 2022 to between Sh4,600 and Sh5,000 per bag in May.

The report said to cushion consumers from the high prices, the government waived duties and levies on maize imports from countries outside the East African Community and Comesa regions.

The report showed that despite the waiver, prices continued to rise due to shortages, high cost of fuel and disruption in the global supply chain.

“A two-kilo packet of maize flour was retailing between Sh190 and Sh215. The government made a decision to further cushion consumers through the Maize Flour Subsidy Programme,” it said. 

The committee said in carrying out the inquiry, it held meetings with the Cereal Millers’ Association – umbrella body of the larger firms, GMOA and the Ministry of Agriculture.

The committee also received written submissions on the programme from the National Treasury and the Attorney General’s office.

“The committee was able to establish that sifted maize flour under the programme was not stamped and this may have reduced the success levels of the programme. The committee received two different figures of maize flour supplied in the programme from the ministry, CMA, and GMOA,” the report said.

Mutunga added that the amount of money paid and what was owed to the millers provided to the committee by the three stakeholders was different.

“From the observation, the committee recommended that millers under the Grain Mill Owners Association be paid the money owed to them by the ministry. The committee will undertake further investigation into the matter in order to determine the fate of the Cereal Millers’ Association,” the committee said.

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